Omni Financial, LLC v. Global Petroleum, LLC

Background

Omni Financial, LLC alleged that Global Petroleum, LLC, Suzette Jerez, Edward Forte, and Precise Construction & Dismantlement Systems, Inc., doing business as Precise Construction, fraudulently induced Omni to invest in a joint venture involving the purchase and resale of gold ore. According to the complaint, Omni invested $1,375,000, but the defendants did not use the money to purchase gold, did not contribute matching funds, and did not have a buyer ready to purchase the gold. Omni alleged damages of $2,412,474.66.

Global executed a written joint venture agreement and a straight note. Forte executed a loan guaranty promising to pay Global’s debt to Omni up to $1,375,000, and Precise Construction executed a payment guaranty with the same limit. After Global and Jerez failed to meet settlement obligations, the court entered an earlier judgment against Global and Jerez jointly and severally for $2,500,000, plus $34,383.74 in attorneys’ fees and costs.

The Clerk entered default against Forte and Precise Construction. Omni sought default judgment against them on Claims 8 and 9, which alleged breach of the two written guaranties. Omni requested $1,375,000 and $62,405.65 in attorneys’ fees and costs. Forte and Precise Construction did not respond to the motion.

Court’s Analysis

The court first determined that it had subject-matter jurisdiction based on complete diversity of citizenship and an amount in controversy exceeding $75,000. It also found specific personal jurisdiction over Forte and Precise Construction because they entered guaranty agreements with Omni, which the opinion identifies as a California citizen, and the claims arose from those agreements. Service was adequate because both defendants had waived service.

The court applied the seven factors used in the Ninth Circuit to decide whether to enter default judgment. It concluded that the factors favored Omni. The complaint attached the guaranty agreements and alleged facts supporting Omni’s performance, the defendants’ breaches, and resulting damages. The defendants’ failure to respond made a decision on the merits impractical, and the amount sought was consistent with the guaranty agreements.

The court found that Omni established entitlement to the $1,375,000 guaranty amount. It also found that the guaranty agreements allowed recovery of reasonable attorneys’ fees and costs. However, Omni had not adequately shown which fees and costs were connected to Claims 8 and 9 rather than to unrelated claims, such as the fraud claims against Global and Jerez.

Disposition

The court GRANTED Omni’s motion for default judgment. It ordered entry of default judgment against Forte and Precise Construction, jointly and severally, for $1,375,000 plus reasonable attorneys’ fees and costs subject to proof. The court directed Omni to file a supplemental brief, a fee chart, and a proposed amended judgment addressing the recoverable fees and costs attributable to Claims 8 and 9.

Judge Beth Labson Freeman also vacated the November 7, 2019 hearing on the default-judgment motion and the Initial Case Management Conference. The court terminated as moot Omni’s motions for permission to appear by telephone at those proceedings.